(delivering the Judgment of the Court) The appellant, an Indonesian, and the respondent, a Singaporean, are shareholders and directors of ASPA Shipyard Pte. Ltd. ("the Company"). The company was incorporated in Singapore on May 14, 1974 and has an authorised capital of $ 2,000,000 divided into 2,000,000 shares of $ 1 each, of which 200,000 shares have been issued and are fully paid. Initially, the 200,000 shares were held as to 190,000 shares by the appellant and 10,000 shares by the respondent. According to the appellant, the funds for the entire issued share capital were provided by him and the 10,000 shares were given by him to the respondent, who was essentially his assistant. Soon after its incorporation, the Company purchased office premises at the International Plaza, Anson Road, including the premises where it presently carries on business, namely, Unit 816-817, 8th floor, International Plaza, Anson Road, Singapore 0207, and also other properties, including shares in quoted companies and a motor vehicle. The funds for the purchase of all these properties came from the companys capital and loans from financial institutions and from the appellant himself.

Sometime in February 1980, the appellant negotiated for the purchase of a twin-screw tug boat of 3,000 BHP known as "Hanzan Maru" in Japan. He intended the vessel to be owned by the Company, and thereafter to be chartered to a company in Indonesia, which in turn would charter it to Pertamina. He instructed the respondent to obtain a loan on behalf of the company to finance partly the purchase of the vessel and was informed that the lender, a finance company, required the registration of the vessel as a Singapore ship. He therefore asked the respondent to put in process the registration of the vessel in Singapore in the name of the Company. In attempting to carry out this task, the respondent met with one obstacle. At that time, under the administrative guidelines laid down by the Registrar of Ships, Singapore, certain vessels, such as the vessel acquired by the appellant, would not be accepted for registration as Singapore ships if they were foreign-owned, and where a vessel was owned by a company incorporated in Singapore, it would be considered as foreign-owned if half or more of the issued shares of the company were owned by foreigners. As the majority of the shares of the company was owned by the appellant, the vessel, if it was to be owned by the Company, would be considered as foreign-owned and therefore would not be accepted for registration as a Singapore ship. The appellant was informed of this requirement by the respondent. It was then agreed between them that the appellant would transfer to the respondent 92,000 shares of the Company ("the said Shares") which the respondent would hold on trust for the appellant. Accordingly, the said Shares were transferred to the respondent who became the registered owner of more than half of the issued shares of the Company. The vessel, which by then had its name changed to "Tridaya Baruna X", was ultimately registered under the Singapore flag in the name of the Company. The loan for financing partly the purchase of the vessel was obtained from Sim Lim Finance Limited on the security of the vessel and two units of office premises at the International Plaza. The vessel was then chartered to an Indonesian company known as P T Aspa Shipping which in turn chartered it to Pertamina.

In early December 1980, the respondent executed a blank transfer of the said shares and also signed a board resolution approving the said transfer, and he delivered both the documents to the appellant. By the end of May 1981 or thereabout the loan borrowed from Sim Lim Finance Limited had been repaid in full and the appellant decided to have the said shares transferred to another nominee, Madam Chong Mui Hong, a Singaporean. He therefore caused the blank transfer to be completed and executed by Madam Chong; it was then dat